Observations and reflections from Tibor R. Machan, professor of business ethics and writer on general and political philosophy, now teaching at Chapman University in Orange, CA.

Thursday, February 22, 2007

Defending Capitalism's Integrity

by Tibor R. Machan

For most of its history the capitalist economic system has been both admired and criticized. Its capacity for making productivity possible in human communities is unparalleled and hardly anyone can deny this. Even the late American Marxist, Robert Heilbroner, famous for his book The Worldly Philosophers, acknowledged this after the fall of the Soviet Union. He wrote in The New Yorker Magazine that "... Ludwig von Mises ... had written of the 'impossibility' of socialism, arguing that no Central Planning Board could ever gather the enormous amount of information needed to create a workable economic system. ... It turns out, of course, that Mises was right. ..." And Mises, of course, was one of the most consistent, uncompromising defender of pure, laissez-faire capitalism.

Yet, even after the demise of the Soviet system of socialism—the only type that ever aspired to be a fully consistent version of that kind of political economy, with full collective ownership of the means of production (including, as Heilbroner himself noted in his own book, Marxism, For and Against), human labor—many keep criticizing the fully free market system of capitalism. Libertarianism, which is the broader political equivalent of it, also gets this criticism, namely, that it has no room for a safety net for those in dire straits, those who are helpless, indigent, needy, unprepared to deal with market processes, etc. This is the usual mantra of the critics. More extreme versions of them, of course, don't like anything about capitalism and want some kind of dreamlike fully egalitarian system where the wealth is nearly evenly distributed, even if this means the complete destruction of productivity in such a human community. Better we are all equal and poor than we are unequal and most of us quite well off, with some even extraordinarily wealthy.

Never mind this last alternative—it's a loser for sure and only some dreamers who would attempt to remake human nature support it. But what about those who find fault with full, laissez-faire capitalism because of its refusal to allow government to provide for those in dire straits and such? Don't they have a point?

Yes, they do—but they make inferences from it that do not follow. It is possible in a fully capitalist system for some to remain left out. There can be innocent hard luck cases, there is no doubt about that. What doesn't follow is that government ought to do something about this. Instead, free men and women would have to muster the resolve to lend a hand where that's needed. And it's rank cynicism to deny that they would—after all, it is precisely in semi-capitalist systems that charity and philanthropy thrive today! Furthermore, to think that such help would not be forthcoming undermines the very idea that it is used to support, namely, that democratic governments can step in and do the job. That's because such governments are a reflection of the population, if they really are democratic. Which means if the people are mean and heartless, government would be so in spades.

But even beyond these replies to the critics, there is the problem that once the principles of a fully free society are compromised in the legal system, all hell breaks loose. Even if government might be effective in lending its hand to those in dire straits, as soon as it would do this nearly everyone in society would insist that their agenda deserves support, too. There is no way to hold back this logic—a legal system that allows favoritism for even the most extraordinarily needy will be unable to resist yielding to the pleas of all others, and all others would mount massive lobbying efforts to achieve this. All of it is all too evident in current welfare states across the globe and it produces financial crises and more poverty everywhere than what a fully capitalist system would likely produce.

The bottom line is that a fully free society is really the best idea for human community life and even the hard luck cases are more likely to benefit from it than they would from societies with government interference.